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ESG is now integrated by 75% of sovereign wealth funds.

A study by Invesco found that an ESG policy is now implemented by 75% of sovereign wealth funds.

Compared to previous years, the percentage has been steadily increasing, with only 46% of sovereign wealth funds integrating ESG in 2017.

According to Invesco's Global Sovereign Asset Management Study 2022, 27% of central banks have formal ESG policies in place. This is an increase from just 11% in 2017.

A little less than half (44%) of central banks claimed that the Covid-19 pandemic has resulted in a greater emphasis on ESG.

Most central banks, however, still do not have an organization-wide ESG policy in place.

A lack of ESG policy was found to have many contributing factors, including slow organizational change and a lack of government leadership.

The lack of clear regulatory standards and poor data/ratings were cited as the two most "significant" obstacles to ESG investing.

The West led the way in adopting ESG policies, with 77 percent of sovereign wealth funds and central banks doing so. Asia and the Middle East were next with 68 percent and 16 percent, respectively (55 percent ).

With only 30% of sovereign wealth funds and central banks having an ESG policy in place within the organization, emerging markets came in last.

In response to the growing ESG integration, one Middle Eastern-based development sovereign said: "Historically, we have been a very low-profile shareholder. The regulatory environment, however, has forced us to take a stand, and ESG is growing in importance.

"If you do not give the public a good story to tell, the public creates its own narrative, which is frequently false."

139 chief investment officers, heads of asset classes, and senior portfolio strategists from 81 sovereign wealth funds and 58 central banks, collectively in charge of €22.6 trillion in assets, were questioned by Invesco.


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